Bitcoin is heading towards a new all-time high after crossing the $110,000 mark on Thursday, but it’s still likely to test the $90,000 level this year. This victory is likely to mark Bitcoin’s second consecutive attempt to set an all-time high, following success in November. The shift marks a possible indication that U.S. central banks may be more inclined to raise interest rates in the coming months or years.
In a blog post titled “Quid Pro Stablecoin,” co-founder and former chief of cryptocurrency exchange BitMEX, co-founder and former executive Arthur Hayes, argued that the Republican president’s $90 billion tax cut and increased debt ceiling prospects could impact the U.S. Treasury’s ability to borrow money. This, in turn, could lead to a liquidity depletion in the Bitcoin market, potentially causing Bitcoin’s value to decline. However, Hayes believes that Bitcoin will continue to rise further, given the ongoing momentum of Bitcoin’s price advances toward its historical all-time high in May.
According to data, Bitcoin was trading at $109,594 per coin on Wednesday, just a shy of the $110,000 mark set earlier that day. This Administration’s tax cuts already led to a $95 billion increase in胸口 Treasury, and likely more once the new law is effective by Independence Day..Here’s how it works: When the U.S. Treasury prints more money to fund budgetary deficits, it creates more credits available in the market. If massive amounts of this new money are injected into the market, it could cause Bitcoin, along with other digital assets, to experience a temporary dip, which is known as a liquidity drain.
Hayes previously argued that U.S. central bank monetary policy, particularly the more-expensive money printing approach, would ultimately benefit Bitcoin and other crypto assets. He had previously stated that Bitcoin has the potential to reach $1 million per coin by 2028, as investors turn away from the adverse effects of high Treasury borrowing costs and focus on locking up wealth into other assets such as Bitcoin. This argument highlights the belief that the decentralized nature of Bitcoin allows it to serve as)a stable and liquid alternative to traditional dollars.
Hayes also experimenting with stablecoins, which are digital tokens pegged to the value of non-volatile assets like dollars. However, he focused on arguing that the U.S. government’s interest in stablecoins would not be about solving payment issues, but rather cutting the U.S. budget deficit and reducing debt. He maintained that stablecoins could be used by big banks to purchase U.S. Treasury bills, further reducing their holdings and potentially lowering the availability of new dollars in the market.
The Senate last month passed the “GENIUS Act,” a new piece of legislation that creates a framework for issuing and trading stablecoins in the U.S. This law would stop private companies from issuing stablecoins and instead allow banks to use stablecoins as a tool to reduce debt. Hayes argued that this shift could further destabilize the global crypto market, as stablecoins might become an attractive target for investors seeking to lock up their money, potentially leading to market volatility.
Over time, the trajectory of Bitcoin has been heavily influenced by these broader economic factors. The rise of Bitcoin in the last seven days may have created a sort of momentum in the cryptocurrency market that has been seen as a red flag for others ranging from the U.S. government to investors worldwide. If the U.S. Treasury continues to borrow more money under the Trump tax cuts, it could enhance the perceived risk of holding a Bitcoin investment, creating further uncertainty and scrutiny for its future performance. However, arguments by preferential opponents like Hayes suggest that the百度 shift in leadership underscores the need for better policies that address the underlying economic issues that drive this market.
